Kojun Hamada

Donor Altruism and the Transfer Paradox in an Overlapping Generations Model

This paper examines the transfer problem between two countries when a donor exhibits altruistic utility toward a recipient in a one-sector overlapping generations model. We demonstrate that if the donor has a larger marginal propensity to save than the recipient, the donors altruism never contributes to donor enrichment irrespective of the degree of the donors altruism. Donor enrichment occurs only if the donor has a smaller marginal propensity to save and a sufficiently high level of altruism. These findings imply that the altruism of a donor toward a recipient does not necessarily explain the motivation to voluntarily provide a transfer.

Introduction of an Individual Quota (IQ) System to Japan’s Fishing Industry: An Economic Analysis

Individual quota (IQ) systems are effective methods of management of fisheries resources and are being implemented by nations throughout the world. Japan’s first IQ system was introduced to the Alaskan pink shrimp pot fishery in the Akadomari region of Sado Island. This chapter examines the resulting change in the unit prices of the shrimp shipped from this shrimp pot fishery. The results demonstrate that by reducing competition with the trawl net fishery and allowing operation during summer, the introduction of an IQ system realized the advantage of enabling shipments of shrimp during the high-price, high-demand period. The IQ system offers shrimp pot fishers an economic incentive to catch and ship as much as possible of their allotted volume of shrimp in the highest-priced period.

Privatization Neutrality Theorem and Discriminatory Subsidy Policy

This study revisits the privatization neutrality theorem that claims that social welfare is exactly the same before and after privatization when the government gives the optimal subsidy to both public and private firms in a mixed oligopoly. Unlike the existing literature that has assumed that a uniform subsidy is given to public and private firms, we demonstrate that if the discriminatory subsidy rates are adopted even when there is firm asymmetry between public and private firms, the privatization neutrality theorem continues to hold. First, we show that even if the cost of the public firm differs from those of private firms, the privatization neutrality theorem holds by appropriately subsidizing both public and private firms at the different levels. Second, even if the public firm acts as a Stackelberg leader before and after privatization, the government can attain privatization neutrality by adopting the discriminatory subsidy and, as a result, can achieve social welfare maximization. Our result suggests that even when there exists firm asymmetry between public and private firms, it is not important for privatization authorities to determine whether to privatize the public firm.

Privatization Neutrality Theorem: When a Public Firm Pursues General Objectives

This paper examines the privatization neutrality theorem when a public firm pursues general objectives other than welfare maximization. This theorem states that when the government gives firms optimal subsidies, welfare is exactly the same before and after privatization. However, we present a seemingly paradoxical result. When a public firm incorrectly assumes that subsidies change the welfare size, privatization is necessarily welfare neutral, whereas when the public firm correctly recognizes that subsidies only bring about income redistribution, without affecting welfare, the situations in which neutrality holds are limited.

Population growth and the transfer paradox in an overlapping generations model

This study investigates whether the transfer paradox (donor enrichment and/or recipient impoverishment) occurs when a donor and a recipient have different population growth rates by using a one‐sector, two‐country overlapping generations model. We show that if the population growth rates differ, neither donor enrichment nor recipient impoverishment occurs in the steady state under dynamic efficiency. This result is in stark contrast to the existing results that the transfer paradox might occur when a donor and a recipient country have different marginal propensities to save, assuming that both have the same population growth rate. Furthermore, we present the condition for the transfer problem to occur on the transition path and show that the transfer paradox is less likely to occur as the economy converges to the steady state. Our result shows that the prevailing finding that the transfer paradox can occur in an overlapping generations model is limited to the special case of countries having the same population growth rate.

INSUFFICIENT ENTRY OF EMPLOYEE-CONTROLLED FIRMS IN A FREE-ENTRY OLIGOPOLY: INSUFFICIENT ENTRY OF EMPLOYEE-CONTROLLED FIRMS IN A FREE-ENTRY OLIGOPOLY

This study is a theoretical examination of whether employee-controlled firms (ECFs) enter a free-entry oligopolistic market excessively or insufficiently, from the viewpoint of welfare maximization. The excess entry theorem is well known in oligopoly theory. According to this theorem, a greater number of profit-maximizing firms enter a free-entry oligopolistic market than is optimal for welfare maximization. We demonstrate the possibility that insufficient entry arises when ECFs compete in a free-entry market. In particular, we show that if both the demand and cost functions are convex, insufficient ECF entry necessarily occurs. Our results suggest that competition among firms seeking purposes other than profit might lead to insufficient entry because differences in competing firms objectives affect the intensity of market competition.

Privatization Neutrality Theorem When a Public Firm Maximizes Objectives Other than Social Welfare

This chapter investigates the privatization neutrality theorem when a public firm has a different objective from social welfare maximization. The privatization neutrality theorem claims that when the government gives the optimal subsidy to both public and private firms, social welfare is exactly the same before and after privatization. We demonstrate that if the discriminatory subsidy scheme is adopted to public and private firms, the privatization neutrality theorem can be recovered in a variety of situations. Especially, we obtain a seemingly paradoxical result as follows: When a public firm incorrectly recognizes that a subsidy to firms by a government directly affects the welfare size, the privatization neutrality necessarily holds. In contrast, when a public firm correctly recognizes that a subsidy affects only income distribution but not social welfare itself, the situation in which the neutrality holds is limited.

Privatization in a Stackelberg Mixed Oligopoly

This chapter examines whether privatization improves social welfare in a Stackelberg mixed oligopoly. Extending the pioneering study of De Fraja and Delbono (Oxf Econ Pap 41(1):302–311, 1989) to Stackelberg competitions between a public firm and private firms, we investigate whether privatization increases social welfare in a sequential-move game. We consider the different competitive environments in which even after privatization, a public firm’s Stackelberg position is maintained. We demonstrate the following results: First, when a public firm acts as a Stackelberg leader before and after privatization, privatization necessarily decreases social welfare irrespective of the number of private firms. Second, even when a public firm acts as a Stackelberg follower before and after privatization, privatization decreases social welfare if the number of private firms is relatively small.

Incentive for innovation and the optimal allocation of patents

This article theoretically investigates how different ownership structures of patents affect ex ante and ex post incentives for innovation by applying a property rights approach. We explore a model in which two research laboratories invest in R&D to obtain an innovative patent, and after successfully obtaining the patent they determine an ownership structure for the patent. The two parties consider how the determined patent ownership would affect their noncontractible relation-specific investments for commercialisation. We demonstrate that joint ownership of a patent between two parties is optimal. More concretely, if a selfish (altruistic) relation-specific investment is more important than an altruistic (selfish) investment, a joint ownership with no (bilateral) veto is optimal to maximise the joint value. Moreover, when both parties do not commit themselves to joint ownership in advance, they have greater incentive to invest in R&D than committing, even if they understand that joint ownership is desirable ex post.

The Transfer Problem and Intergenerational Allocation in an Overlapping Generations Model

ABSTRACT We investigate the transfer problem between two countries in the steady state in a one-sector overlapping generations model and explain how transfers should be shared between the young and old generations of the donor country and allocated across the generations of the recipient country. Except at the golden rule of capital accumulation, the ratios of the burden and distribution of transfers between the young and old generations affect welfare. We obtain the following results. First, the sharing of the transfer burden in the donor country depends on the relative size of two effects, namely, a negative direct effect and a positive indirect effect. If the former exceeds the latter, it is preferable for the donor country to allocate all of the transfer burden to the old generation and vice versa. Second, from the viewpoint of welfare maximization, it is preferable for the recipient country to distribute all of the transfers to the young generation. In contrast to the existing literature, these results suggest that the setting whereby the young generation of the donor country defrays all transfer costs may not be justifiable from the viewpoint of donor welfare maximization.